UK to Accelerate rise in State Pension age

Sandy King
In the News

 

Thursday 5th December 2013
UK to Accelerate rise in State Pension age

British Chancellor George Osborne will announce in his upcoming Autumn Statement that the date when people must be 68 in order to draw a state pension could be brought forward by about 10 years to the mid 2030’s.

The government had said previously that the state pension age (SPA) would increase to 66 by 2020 and 67 by 2028. However, originally the jump to 68 was only scheduled for some time between 2044 and 2046. This will now be brought sharply forward.

The government also said that the SPA could rise further, to 69, by the late 2040s. My view is that ultimately the SPA will go to 70 and beyond.

The number of people of state pension age is projected to increase by 31 per cent from 12.3m last year to 16.1m by mid-2037 despite the increases in the SPA that are already planned, according to data published last month by the Office for National Statistics.

Over the same period, the number of people of working age (i.e. those aged between 16 and state pension age) is projected to rise at a far slower rate of 12 per cent from 39.4m in mid-2012 to 44.2m by mid-2037.

This means that in 25 years, there will be 2.7 working age people for each pensioner, which is down from a ratio of 3.2 last year.

This is clearly not a problem that is unique to the U.K. Life expectancy is increasing around the world and governments simply cannot afford to pay people state pensions for 20+ years.